19th Mar 2015 08:14
LONDON (Alliance News) - Ophir Energy PLC Thursday said it swung to a pretax profit in 2014, bolstered by a USD671.7 million gain after the sale of its interest in three blocks in Tanzania.
In a statement, the Africa-focused oil and gas company said it made a USD288.5 million pretax profit in 2014, compared with a USD280.5 million pretax loss in the prior year.
The move into the black was enabled by the sale of its 20% stake in blocks one, three and four in Tanzania, for USD1.29 billion before tax to Pavilion Energy PLC. The gain registered on the farm-out more than offset an increase in exploration expenses to USD333.8 million from USD229.1 million. That was also helped by other operating expenses including administration.
Chief Executive Nick Cooper said that the deal with Pavilion Energy and the "first steps towards a sustainable financing strategy" with the completion of its USD326.1 million acquisition of Salamander Energy earlier in March. He also outlined the group's response to lower oil prices.
"We have responded to the current oil price environment by identifying and actioning USD250 million of budget savings and capex reductions over the next two years," Cooper said.
"However, there is a unique opportunity at the moment to acquire exploration acreage at low cost and with minimal work commitments. Ophir has doubled its exploration footprint during 2014 but only has USD100 million of committed E&A (exploration and appraisal) spending in the portfolio between now and 2017," Cooper said.
With the acquisition of Salamander Energy, Ophir said it expects its capital expenditure to amount to between USD250 million and USD300 million in 2015, which will fund pre-development expenditure in Tanzania and Equatorial Guinea, acquisition of further seismic data across the expanded exploration portfolio, drilling of exploration wells on the G4/50 Block, Gulf of Thailand and development of the Bualuang and Kerendan fields.
"Looking further ahead to 2016 and 2017, given the company's limited exposure to committed exploration and appraisal capital expenditure of only USD100 million over the next three years, and its balance sheet strength, the company should be well positioned to manage and leverage to its advantage the changing market conditions," Ophir Energy said in a statement.
Ophir shares were up 2.3% at 127.70 pence early on Thursday morning in London.
By Samuel Agini; [email protected]; @samuelagini
Copyright 2015 Alliance News Limited. All Rights Reserved.
Related Shares:
OPHR.L